How to Use Business Nexus for Your Business Entities

In this episode of Coffee with Carl, attorney Carl Zoellner explains how to use business nexus for your business entities.

Hello everyone!

Welcome to another episode of Coffee with Carl. I am your host, Carl Zoellner, one of the attorneys here with Anderson Business Advisors. 

Today I want to talk a little bit about your business nexus. The most simple definition of business nexus is your connection to the state in which that entity is conducting business in order to justify that it functions under that state’s laws. 

For example, many times, we have clients come in who’ve set up Wyoming or Nevada entities and have no business nexus in Wyoming or Nevada. 

And at that point, you’re sort of just having a paper trail at your disposal. So yes, it is a Nevada or a Wyoming entity. However, if you get sued, and you cannot justify having a business nexus in Wyoming or Nevada, the argument is in the plaintiff’s favor that your entity should be pulled into whatever state you currently reside. 

This can be a substantial issue for people in California if you’re using out-of-state entities that have weak asset protection laws. It’s vital to understand the business nexus as well as how to provide it or how to create it if you don’t have it. 

One of the services we offer at Anderson is our Company Assistance Program. That Company Assistance Program is for creating that business nexus. We require it for anybody that will have a Nevada or Wyoming entity. Without it, you have almost zero shot at having a Wyoming or Nevada entity being able to function under Wyoming or Nevada law in the case that you get sued.

It’s a vital piece of that company assistance program. To build upon that, it not only provides you a mailing address and a business address in those states, but it also provides things like a phone line service.

That whole product is built around creating that nexus in that state. Out-of-state investors who want to take advantage of Wyoming’s laws and Nevada’s laws can create that business nexus. Therefore, if you get sued, your entity will hold up with that footing in that state. 

A couple of other pieces that generate with that company assistance program is that we will help you with your meetings and minutes. 

We’ll help you with the compliance side of your business entity. It’s incredibly important should you get sued. One of the first things that I’ve heard is, “Well, technically, in an LLC, you don’t need meetings.”

Maybe not, maybe so. One of the first things that come to light in a lawsuit or an audit is, “Let’s see those meetings and minutes,” or “Let’s see your books and records.” Things like that matter even if they’re not required. 

As mentioned, the company assistance program helps on all fronts there. The value is creating that overall business nexus in a state where you may physically have a personal presence there to help justify it. 

There are always lots of questions, such as “How does my Wyoming entity help me if I’m here in Texas, or I’m here in Washington, DC, or I’m here in New York?” 

Well, creating that business nexus in those states is how that entity helps you there. And then you get to take advantage of all of the anonymity aspects, as well as the asset protection aspects of those states. 

The Takeaway

As always, if anybody has any questions and you are our client, you’re more than welcome to schedule a time with me or any of the other attorneys. 

I would also encourage everybody to continue to take advantage of our free content out there. 

We like to educate our clients so we can have productive conversations when we start looking at your particular situation.

So until next time, I want to thank everybody for joining me for Coffee with Carl. I look forward to seeing y’all. Of course, I plan to attend Toby’s Tax Tuesdays and watch Toni Talks.

I’m also a consumer of our content as well because I like it. Until next time, thanks for joining me. We will catch you on the next episode. Thanks, everyone.

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Got an idea for a future Coffee with Carl? Send it to Carl at cwc@andersonadvisors.com.